UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 1, 2021
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code: (936 ) 230-5899
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act o
Item 2.02. Results of Operations and Financial Condition.
On September 01, 2021, Conn’s, Inc. issued a press release reporting its second quarter fiscal year 2022 financial results. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
None of the information contained in Item 2.02 or Exhibit 99.1 of this Form 8-K shall be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and none of it shall be incorporated by reference in any filing under the Securities Act of 1933, as amended. Furthermore, this report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | ||||||||||||||||
| 99.1* | |||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) | ||||||||||||||||
* Furnished herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONN’S, INC. | |||||||||||
| Date: | September 1, 2021 | By: | /s/ George L. Bchara | ||||||||
| Name: | George L. Bchara | ||||||||||
| Title: | Executive Vice President and Chief Financial Officer | ||||||||||
Exhibit 99.1
Conn’s, Inc. Reports Second Quarter Fiscal Year 2022 Financial Results
THE WOODLANDS, Texas, September 1, 2021 - Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the “Company”), a specialty retailer of furniture and mattresses, home appliances, consumer electronics and home office products, and provider of consumer credit, today announced its financial results for the quarter ended July 31, 2021.
“Strong second quarter retail and credit results exceeded our expectations and demonstrate that our growth strategies are taking hold. Second quarter same store sales increased 16.4% and total retail sales are up 24.0% over the prior year period. Strong retail performance combined with a second quarter credit spread of 1,200 basis points, contributed to record second quarter earnings per diluted share. In fact, earnings per diluted share of $2.74 for the first six months of the year are higher than any annual earnings in Conn’s 131-year history,” stated Chandra Holt, Conn’s Chief Executive Officer.
“Momentum remains positive across our business reflecting strong consumer demand and the growth strategies we have put in place. Total retail sales for the first half have increased at the fastest growth rate in seven years. As a result, we are increasing our fiscal year 2022 same store sales expectation from high single-digit same store sales growth to mid-teens same store sales growth,” continued Ms. Holt.
“I believe Conn’s is well positioned to continue to innovate, grow and capitalize on an enormous addressable market. As my tenure as CEO begins, I am excited by the direction Conn’s is headed and the opportunities we have to create sustainable value for our shareholders. I also want to thank all our team members for their contributions to our success and their continued dedication,” concluded Ms. Holt.
Second Quarter Financial Highlights as Compared to the Prior Fiscal Year Period (Unless Otherwise Noted):
•Net earnings increased to a second quarter record of $1.22 per diluted share, compared to $0.70 per diluted share for the same period last fiscal year;
•Same store sales increased 16.4% for the second quarter of fiscal year 2022 as compared to the second quarter of fiscal year 2021 and increased 3.2% on a two-year basis;
•Strong same store sales combined with the contribution of new showrooms drove a 24.0% increase in total retail sales for the second quarter;
•eCommerce sales increased 210.9% to a quarterly record of $17.3 million;
•Lease-to-own sales increased 70.3% to $41.6 million;
•At July 31, 2021, the carrying value of customer accounts receivable 60+ days past due declined 42.1% year-over-year to the lowest level in eight fiscal years, and the carrying value of re-aged accounts declined 44.5% year-over-year to the lowest level in six fiscal years; and
•Total debt decreased from $749.7 million at July 31, 2020 to $439.6 million at July 31, 2021, a decrease of 41%. Net debt as a percent of the portfolio balance at July 31, 2021, was approximately 36%, compared to 50% at July 31, 2020, and represents the lowest level in over a decade.
1
Second Quarter Results
Net income for the three months ended July 31, 2021 was $37.0 million, or $1.22 per diluted share, compared to net income for the three months ended July 31, 2020 of $20.5 million, or $0.70 per diluted share. On a non-GAAP basis, adjusted net income for the three months ended July 31, 2021 was $37.0 million, or $1.22 per diluted share. This compares to adjusted net income for the three months ended July 31, 2020 of $21.7 million, or $0.75 per diluted share, which excludes professional fees associated with non-recurring expenses.
Retail Segment Second Quarter Results
Retail revenues were $347.0 million for the three months ended July 31, 2021 compared to $279.9 million for the three months ended July 31, 2020, an increase of $67.1 million or 24.0%. The increase in retail revenue was primarily driven by an increase in same store sales of 16.4% and by new store growth. The increase in same store sales reflects an increase in demand across all of the Company’s home-related product categories. The increase also reflects the impact of prior year proactive underwriting changes and industry wide supply chain disruptions, each of which was the result of the COVID-19 pandemic.
For the three months ended July 31, 2021 and 2020, retail segment operating income was $28.7 million and $23.2 million, respectively. The increase in retail segment operating income for the three months ended July 31, 2021 was primarily due to an increase in revenue.
The following table presents net sales and changes in net sales by category:
| Three Months Ended July 31, | Same Store | ||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2021 | % of Total | 2020 | % of Total | Change | % Change | % Change | ||||||||||||||||||||||||||||||||||
| Furniture and mattress | $ | 109,259 | 31.5 | % | $ | 80,984 | 29.0 | % | $ | 28,275 | 34.9 | % | 22.0 | % | |||||||||||||||||||||||||||
| Home appliance | 135,444 | 39.1 | 107,682 | 38.5 | 27,762 | 25.8 | 17.8 | ||||||||||||||||||||||||||||||||||
| Consumer electronics | 48,413 | 14.0 | 47,384 | 16.9 | 1,029 | 2.2 | 0.1 | ||||||||||||||||||||||||||||||||||
| Home office | 17,986 | 5.2 | 14,979 | 5.4 | 3,007 | 20.1 | 10.4 | ||||||||||||||||||||||||||||||||||
| Other | 9,143 | 2.6 | 5,113 | 1.8 | 4,030 | 78.8 | 71.3 | ||||||||||||||||||||||||||||||||||
| Product sales | 320,245 | 92.4 | 256,142 | 91.6 | 64,103 | 25.0 | 16.7 | ||||||||||||||||||||||||||||||||||
Repair service agreement commissions (1) | 23,700 | 6.8 | 20,164 | 7.2 | 3,536 | 17.5 | 13.6 | ||||||||||||||||||||||||||||||||||
| Service revenues | 2,840 | 0.8 | 3,430 | 1.2 | (590) | (17.2) | |||||||||||||||||||||||||||||||||||
| Total net sales | $ | 346,785 | 100.0 | % | $ | 279,736 | 100.0 | % | $ | 67,049 | 24.0 | % | 16.4 | % | |||||||||||||||||||||||||||
(1) The total change in sales of repair service agreement commissions includes retrospective commissions, which are not reflected in the change in same store sales.
Credit Segment Second Quarter Results
Credit revenues were $71.4 million for the three months ended July 31, 2021 compared to $87.0 million for the three months ended July 31, 2020, a decrease of $15.6 million or 17.9%. The decrease in credit revenue was primarily due to a 22.7% decrease in the average outstanding balance of the customer receivable portfolio. These decreases were partially offset by an increase in the yield rate, from 23.2% for the three months ended July 31, 2020 to 23.3% for the three months ended July 31, 2021 and an increase in insurance commissions.
Provision for bad debts was $10.1 million for the three months ended July 31, 2021 compared to $31.9 million for the three months ended July 31, 2020, a decrease of $21.8 million. The change was primarily driven by a year-over-year decrease in net charge-offs of $43.8 million, partially offset by a smaller decrease in the allowance for bad debts during the three months ended July 31, 2021 compared to the three months ended July 31, 2020. The smaller decrease was driven by a lower year-over-year decline in the customer accounts receivable portfolio balance, partially offset by a $5.0 million decrease in the economic adjustment that was driven by an improvement in the forecasted unemployment rate.
Credit segment operating income was $25.5 million for the three months ended July 31, 2021, compared to $18.2 million for the three months ended July 31, 2020. The increase was primarily due to the decrease in the provision for bad debts partially offset by the decrease in credit revenue.
Additional information on the credit portfolio and its performance may be found in the Customer Accounts Receivable Portfolio Statistics table included within this press release and in the Company’s Form 10-Q for the quarter ended July 31, 2021, to be filed with the Securities and Exchange Commission on September 1, 2021 (the “Second Quarter Form 10-Q”).
2
Showroom and Facilities Update
The Company opened three new Conn’s HomePlus® showrooms during the second quarter of fiscal year 2022, all within the state of Florida, bringing the total showroom count to 155 in 15 states. During fiscal year 2022, the Company plans to open a total of eleven to thirteen new showrooms (inclusive of the nine new showrooms opened during the first half of fiscal year 2022).
Liquidity and Capital Resources
As of July 31, 2021, the Company had $362.9 million of immediately available borrowing capacity under its $650.0 million revolving credit facility. The Company also had $8.7 million of unrestricted cash available for use.
Conference Call Information
The Company will host a conference call on September 1, 2021, at 10 a.m. CT / 11 a.m. ET, to discuss its financial results for the three months ended July 31, 2021. Participants can join the call by dialing 877-451-6152 or 201-389-0879. The conference call will also be broadcast simultaneously via webcast on a listen-only basis. A link to the earnings release, webcast and second quarter fiscal year 2022 conference call presentation will be available at ir.conns.com.
Replay of the telephonic call can be accessed through September 8, 2021 by dialing 844-512-2921 or 412-317-6671 and Conference ID: 13722190.
About Conn’s, Inc.
Conn’s is a specialty retailer currently operating 155 retail locations in Alabama, Arizona, Colorado, Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. The Company’s primary product categories include:
•Furniture and mattress, including furniture and related accessories for the living room, dining room and bedroom, as well as both traditional and specialty mattresses;
•Home appliance, including refrigerators, freezers, washers, dryers, dishwashers and ranges;
•Consumer electronics, including LED, OLED, QLED, 4K Ultra HD, and 8K televisions, gaming products, next generation video game consoles and home theater and portable audio equipment; and
•Home office, including computers, printers and accessories.
Additionally, Conn’s offers a variety of products on a seasonal basis. Unlike many of its competitors, Conn’s provides flexible in-house credit options for its customers in addition to third-party financing programs and third-party lease-to-own payment plans.
This press release contains forward-looking statements within the meaning of the federal securities laws, including but not limited to, the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Such forward-looking statements include information concerning our future financial performance, business strategy, plans, goals and objectives. Statements containing the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should,” “predict,” “will,” “potential,” or the negative of such terms or other similar expressions are generally forward-looking in nature and not historical facts. Such forward-looking statements are based on our current expectations. We can give no assurance that such statements will prove to be correct, and actual results may differ materially. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements, including, but not limited to: general economic conditions impacting our customers or potential customers; our ability to execute periodic securitizations of future originated customer loans on favorable terms; our ability to continue existing customer financing programs or to offer new customer financing programs; changes in the delinquency status of our credit portfolio; unfavorable developments in ongoing litigation; increased regulatory oversight; higher than anticipated net charge-offs in the credit portfolio; the success of our planned opening of new stores; technological and market developments and sales trends for our major product offerings; our ability to manage effectively the selection of our major product offerings; our ability to protect against cyber-attacks or data security breaches and to protect the integrity and security of individually identifiable data of our customers and employees; our ability to fund our operations, capital expenditures, debt repayment and expansion from cash flows from operations, borrowings from our revolving credit facility, and proceeds from accessing debt or equity markets; the effects of epidemics or pandemics, including the COVID-19 pandemic; and other risks detailed in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 and other reports filed with the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of such a development changes), or should our underlying assumptions prove incorrect, actual outcomes may vary materially from those reflected in our forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We disclaim any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise, or to provide periodic updates or guidance. All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.
3
CONN-G
S.M. Berger & Company
Andrew Berger (216) 464-6400
4
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands, except per share amounts)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Total net sales | $ | 346,785 | $ | 279,736 | $ | 638,081 | $ | 510,066 | |||||||||||||||
| Finance charges and other revenues | 71,598 | 87,180 | 144,004 | 174,010 | |||||||||||||||||||
| Total revenues | 418,383 | 366,916 | 782,085 | 684,076 | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of goods sold | 216,042 | 176,623 | 400,921 | 323,637 | |||||||||||||||||||
| Selling, general and administrative expense | 137,870 | 115,278 | 263,919 | 228,285 | |||||||||||||||||||
| Provision for bad debts | 10,262 | 32,045 | (6,874) | 149,371 | |||||||||||||||||||
| Charges and credits | — | 1,534 | — | 3,589 | |||||||||||||||||||
| Total costs and expenses | 364,174 | 325,480 | 657,966 | 704,882 | |||||||||||||||||||
| Operating income (loss) | 54,209 | 41,436 | 124,119 | (20,806) | |||||||||||||||||||
| Interest expense | 6,088 | 13,222 | 15,292 | 28,215 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | 1,218 | — | |||||||||||||||||||
| Income (loss) before income taxes | 48,121 | 28,214 | 107,609 | (49,021) | |||||||||||||||||||
| Provision (benefit) for income taxes | 11,117 | 7,694 | 25,207 | (13,339) | |||||||||||||||||||
| Net income (loss) | $ | 37,004 | $ | 20,520 | $ | 82,402 | $ | (35,682) | |||||||||||||||
| Income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | 1.26 | $ | 0.71 | $ | 2.80 | $ | (1.23) | |||||||||||||||
| Diluted | $ | 1.22 | $ | 0.70 | $ | 2.74 | $ | (1.23) | |||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 29,438,605 | 29,070,607 | 29,382,162 | 28,948,216 | |||||||||||||||||||
| Diluted | 30,212,448 | 29,140,546 | 30,072,401 | 28,948,216 | |||||||||||||||||||
5
CONN’S, INC. AND SUBSIDIARIES
CONDENSED RETAIL SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Product sales | $ | 320,245 | $ | 256,142 | $ | 589,456 | $ | 463,340 | |||||||||||||||
| Repair service agreement commissions | 23,700 | 20,164 | 42,831 | 40,265 | |||||||||||||||||||
| Service revenues | 2,840 | 3,430 | 5,794 | 6,461 | |||||||||||||||||||
| Total net sales | 346,785 | 279,736 | 638,081 | 510,066 | |||||||||||||||||||
| Finance charges and other | 224 | 196 | 433 | 431 | |||||||||||||||||||
| Total revenues | 347,009 | 279,932 | 638,514 | 510,497 | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
Cost of goods sold | 216,042 | 176,623 | 400,921 | 323,637 | |||||||||||||||||||
| Selling, general and administrative expense | 102,157 | 78,584 | 193,050 | 156,758 | |||||||||||||||||||
| Provision for bad debts | 142 | 182 | 160 | 350 | |||||||||||||||||||
| Charges and credits | — | 1,355 | — | 1,355 | |||||||||||||||||||
| Total costs and expenses | 318,341 | 256,744 | 594,131 | 482,100 | |||||||||||||||||||
| Operating income | $ | 28,668 | $ | 23,188 | $ | 44,383 | $ | 28,397 | |||||||||||||||
| Retail gross margin | 37.7 | % | 36.9 | % | 37.2 | % | 36.5 | % | |||||||||||||||
Selling, general and administrative expense as percent of revenues | 29.4 | % | 28.1 | % | 30.2 | % | 30.7 | % | |||||||||||||||
| Operating margin | 8.3 | % | 8.3 | % | 7.0 | % | 5.6 | % | |||||||||||||||
| Store count: | |||||||||||||||||||||||
| Beginning of period | 152 | 139 | 146 | 137 | |||||||||||||||||||
| Opened | 3 | 2 | 9 | 4 | |||||||||||||||||||
| End of period | 155 | 141 | 155 | 141 | |||||||||||||||||||
6
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CREDIT SEGMENT FINANCIAL INFORMATION
(unaudited)
(dollars in thousands)
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Finance charges and other revenues | $ | 71,374 | $ | 86,984 | $ | 143,571 | $ | 173,579 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Selling, general and administrative expense | 35,713 | 36,694 | 70,869 | 71,527 | |||||||||||||||||||
| Provision for bad debts | 10,120 | 31,863 | (7,034) | 149,021 | |||||||||||||||||||
| Charges and credits | — | 179 | — | 2,234 | |||||||||||||||||||
| Total costs and expenses | 45,833 | 68,736 | 63,835 | 222,782 | |||||||||||||||||||
| Operating income (loss) | 25,541 | 18,248 | 79,736 | (49,203) | |||||||||||||||||||
| Interest expense | 6,088 | 13,222 | 15,292 | 28,215 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | 1,218 | — | |||||||||||||||||||
| Income (loss) before income taxes | $ | 19,453 | $ | 5,026 | $ | 63,226 | $ | (77,418) | |||||||||||||||
Selling, general and administrative expense as percent of revenues | 50.0 | % | 42.2 | % | 49.4 | % | 41.2 | % | |||||||||||||||
Selling, general and administrative expense as percent of average outstanding customer accounts receivable balance (annualized) | 12.9 | % | 10.3 | % | 12.4 | % | 9.6 | % | |||||||||||||||
| Operating margin | 35.8 | % | 21.0 | % | 55.5 | % | (28.3) | % | |||||||||||||||
7
CONN’S, INC. AND SUBSIDIARIES
CUSTOMER ACCOUNTS RECEIVABLE PORTFOLIO STATISTICS
(unaudited)
| As of July 31, | |||||||||||
| 2021 | 2020 | ||||||||||
Weighted average credit score of outstanding balances (1) | 608 | 596 | |||||||||
| Average outstanding customer balance | $ | 2,414 | $ | 2,589 | |||||||
Balances 60+ days past due as a percentage of total customer portfolio carrying value (2)(3)(4) | 7.2 | % | 10.0 | % | |||||||
Re-aged balance as a percentage of total customer portfolio carrying value (2)(3)(5) | 20.4 | % | 29.9 | % | |||||||
Carrying value of account balances re-aged more than six months (in thousands) (3) | $ | 70,058 | $ | 103,220 | |||||||
| Allowance for bad debts and uncollectible interest as a percentage of total customer accounts receivable portfolio balance | 18.3 | % | 24.8 | % | |||||||
Percent of total customer accounts receivable portfolio balance represented by no-interest option receivables | 29.8 | % | 18.3 | % | |||||||
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Total applications processed | 336,438 | 326,958 | 634,344 | 622,509 | |||||||||||||||||||
Weighted average origination credit score of sales financed (1) | 614 | 617 | 615 | 613 | |||||||||||||||||||
| Percent of total applications approved and utilized | 22.5 | % | 20.0 | % | 22.2 | % | 21.1 | % | |||||||||||||||
| Average income of credit customer at origination | $ | 47,700 | $ | 46,300 | $ | 48,100 | $ | 46,300 | |||||||||||||||
| Percent of retail sales paid for by: | |||||||||||||||||||||||
| In-house financing, including down payments received | 50.9 | % | 48.5 | % | 49.9 | % | 55.1 | % | |||||||||||||||
| Third-party financing | 17.5 | % | 23.9 | % | 17.2 | % | 20.8 | % | |||||||||||||||
| Third-party lease-to-own option | 11.5 | % | 8.4 | % | 11.9 | % | 8.4 | % | |||||||||||||||
| 79.9 | % | 80.8 | % | 79.0 | % | 84.3 | % | ||||||||||||||||
(1)Credit scores exclude non-scored accounts.
(2)Accounts that become delinquent after being re-aged are included in both the delinquency and re-aged amounts.
(3)Carrying value reflects the total customer accounts receivable portfolio balance, net of deferred fees and origination costs, the allowance for no-interest option credit programs and the allowance for uncollectible interest.
(4)Decrease was primarily due to an increase in cash collections and the tightening of underwriting standards that occurred in fiscal year 2021.
(5)Decrease was primarily due to an increase in cash collections, the change in the unilateral re-age policy that occurred in the second quarter of fiscal year 2021 and the tightening of underwriting standards that occurred in fiscal year 2021.
8
CONN’S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
| July 31, 2021 | January 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 8,736 | $ | 9,703 | |||||||
| Restricted cash | 30,961 | 50,557 | |||||||||
| Customer accounts receivable, net of allowances | 461,491 | 478,734 | |||||||||
| Other accounts receivable | 55,260 | 61,716 | |||||||||
| Inventories | 223,662 | 196,463 | |||||||||
| Income taxes receivable | 32,223 | 38,059 | |||||||||
| Prepaid expenses and other current assets | 20,725 | 8,831 | |||||||||
| Total current assets | 833,058 | 844,063 | |||||||||
| Long-term portion of customer accounts receivable, net of allowances | 415,208 | 430,749 | |||||||||
| Property and equipment, net | 186,072 | 190,962 | |||||||||
| Operating lease right-of-use assets | 258,702 | 265,798 | |||||||||
| Deferred income taxes | — | 9,448 | |||||||||
| Other assets | 15,907 | 14,064 | |||||||||
| Total assets | $ | 1,708,947 | $ | 1,755,084 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Current finance lease obligations | $ | 1,371 | $ | 934 | |||||||
| Accounts payable | 89,001 | 69,367 | |||||||||
| Accrued expenses | 99,078 | 82,990 | |||||||||
| Operating lease liability - current | 54,800 | 44,011 | |||||||||
| Other current liabilities | 17,170 | 14,454 | |||||||||
| Total current liabilities | 261,420 | 211,756 | |||||||||
| Operating lease liability - non current | 338,289 | 354,598 | |||||||||
| Long-term debt and finance lease obligations | 438,242 | 608,635 | |||||||||
| Deferred tax liability | 7,803 | — | |||||||||
| Other long-term liabilities | 20,743 | 22,940 | |||||||||
| Total liabilities | 1,066,497 | 1,197,929 | |||||||||
| Stockholders’ equity | 642,450 | 557,155 | |||||||||
| Total liabilities and stockholders’ equity | $ | 1,708,947 | $ | 1,755,084 | |||||||
9
CONN’S, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(unaudited)
(dollars in thousands, except per share amounts)
Basis for presentation of non-GAAP disclosures:
To supplement the Condensed Consolidated Financial Statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the Company also provides the following non-GAAP financial measures: adjusted net income (loss), adjusted net income (loss) per diluted share and net debt as a percentage of the portfolio balance. These non-GAAP financial measures are not meant to be considered as a substitute for, or superior to, comparable GAAP measures and should be considered in addition to results presented in accordance with GAAP. They are intended to provide additional insight into our operations and the factors and trends affecting the business. Management believes these non-GAAP financial measures are useful to financial statement readers because (1) they allow for greater transparency with respect to key metrics we use in our financial and operational decision making and (2) they are used by some of our institutional investors and the analyst community to help them analyze our operating results.
ADJUSTED NET INCOME (LOSS) AND ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE
| Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income (loss), as reported | $ | 37,004 | $ | 20,520 | $ | 82,402 | $ | (35,682) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Loss on extinguishment of debt (1) | — | — | 1,218 | — | |||||||||||||||||||
Professional fees (2) | — | 1,534 | — | 3,589 | |||||||||||||||||||
| Tax impact of adjustments | — | (343) | (274) | (803) | |||||||||||||||||||
| Net income (loss), as adjusted | $ | 37,004 | $ | 21,711 | $ | 83,346 | $ | (32,896) | |||||||||||||||
| Weighted average common shares outstanding - Diluted | 30,212,448 | 29,140,546 | 30,072,401 | 28,948,216 | |||||||||||||||||||
| Earnings (loss) per share: | |||||||||||||||||||||||
| As reported | $ | 1.22 | $ | 0.70 | $ | 2.74 | $ | (1.23) | |||||||||||||||
| As adjusted | $ | 1.22 | $ | 0.75 | $ | 2.77 | $ | (1.14) | |||||||||||||||
(1) Represents a loss of $1.0 million from retirement of $141.2 million aggregate principal amount of our 7.25% senior notes
due 2022 (“Senior Notes”) and a loss of $0.2 million related to the amendment of our Fifth Amended and Restated Loan and
Security Agreement.
(2) Represents professional fees associated with non-recurring expenses.
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NET DEBT
| July 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Debt, as reported | |||||||||||
| Current finance lease obligations | $ | 1,371 | $ | 758 | |||||||
| Long-term debt and finance lease obligations | 438,242 | 748,902 | |||||||||
| Total debt | $ | 439,613 | $ | 749,660 | |||||||
| Cash, as reported | |||||||||||
| Cash and cash equivalents | 8,736 | 6,385 | |||||||||
| Restricted Cash | 30,961 | 63,836 | |||||||||
| Total cash | $ | 39,697 | $ | 70,221 | |||||||
| Net debt | $ | 399,916 | $ | 679,439 | |||||||
| Ending portfolio balance, as reported | $ | 1,105,713 | $ | 1,357,030 | |||||||
| Net debt as a percentage of the portfolio balance | 36.2 | % | 50.1 | % | |||||||
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